FCC Approves Net Neutrality Rules, Setting Stage For Legal Battle

Telecom, cable industries expected to challenge commission’s 3-2 vote.

The Federal Communications Commission set aside two decades of laissez-faire policy Thursday to assert broad authority over the Internet, voting to regulate broadband providers as public utilities and overruling laws in two states that made it harder for cities to offer their own Web service.

Both rulings were setbacks for big telecommunications and cable companies that have invested billions of dollars in their networks and wins for Internet companies that have enjoyed explosive growth as people spend more time online. The moves reflect an evolution from regulators treating the Internet as a technological innovation that needed to be nurtured to a powerful commercial venue with rival constituencies that need to be balanced.

The commission pledged to use a light touch, and the immediate practical effects of the decisions are limited because companies, regulators and users all agree in principle that traffic shouldn’t be blocked.

Still, the shift in philosophy was notable, with possible implications down the road that are hard to predict. It even drew warnings from Google Inc., which told the White House privately it was making a mistake when President Barack Obama called in November for the approach the FCC adopted on Thursday.

“The blessing and the curse for the cable industry and the telcos is they have an infrastructure which is absolutely critical to the economy, to education, to health care—far beyond the original use for which they built those networks,” said Blair Levin, who was chief of staff at the FCC in the 1990s and who headed up the agency’s 2010 National Broadband Plan. “The good news is everybody needs it. The bad news is when everybody needs it, the government plays a role.”

Netflix said the day was a win for consumers. Telecom and cable industry groups said the decisions opened the door to heavy-handed regulation that would hurt innovation. FCC Chairman Tom Wheeler shot back at such criticism ahead of the vote, saying, “This is no more a plan to regulate the Internet than the First Amendment is a plan to regulate free speech.”

Both votes in the Democratic-controlled commission were 3-2 along party lines. In the more closely watched decision, the FCC approved new net neutrality rules that bar Internet service providers from blocking Web traffic or letting them charge websites for priority service.

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